Morgan Stanley already sells crypto. It runs its own spot bitcoin ETF, the first from a major US bank, and E*Trade clients have been trading BTC, ETH and SOL since July.
Vaults could be next, but first they have to get through the lab.
On Tuesday, Morgan Stanley revealed that it has set up a dedicated Digital Asset Lab, where teams can test stablecoins, tokenized deposits, tokenized money market funds and CBDCs away from the bank’s core systems.
Vaults, said digital assets head Amy Oldenburg, are of particular interest, with a “very reasonable path” into the bank’s future. Just not yet: “It is too nascent; we cannot put the rest of the platform at risk.”
Hence the quarantine. In the lab, technology first has to “earn the right to scale,” and scale, as Oldenburg noted back in April, is the hard part for a firm with $8 trillion across wealth and asset management.
Because deposits alone don’t keep a vault growing. A lending vault only earns yield when someone borrows its stablecoins, and borrowers need collateral, which today is still mostly crypto. Oldenburg’s own question: “What are the different assets you can use for collateral in vaults?”
Bonds would be an obvious answer, and Morgan Stanley is looking for someone to put them onchain. Since mid-September, its Fixed Income Division has been advertising for a VP Digital Assets Strategy to lead tokenization across the desks that trade the bank’s rates and credit.
And just in case a vault slips out of the lab too soon, the bank is also recruiting a VP Digital Assets Operational Risk.
IN TODAY’S BRIEFING:
Lloyds completes a live stablecoin settlement pilot with Visa
UK’s biggest banks complete first live trials using tokenized deposits
WITH INSIGHTS FROM
Ryan
Hayward
Barclays
Tim
Bailey
Red Date Technology
Mark
Goree
Fnality
HIGH SIGNAL NEWS
Lloyds completes a live stablecoin settlement pilot with Visa. During the trial, the bank settled US$750,000 in payment obligations using Circle’s USDC, with funds reaching Visa in less than an hour, even over the weekend. The bank identified potential benefits including greater visibility into the status of funds and less liquidity tied up, particularly outside banking hours. 🏦
Citi partners with Coinbase on stablecoin payments. The bank’s institutional clients will be able to accept stablecoins at checkout through their existing banking application. Coinbase will provide the payment infrastructure and automatic conversion into fiat, while Citi will handle settlement. 🇺🇸
Barclays and Wells Fargo join Agorá. Other new participants include Rabobank and Royal Bank of Canada. Led by the BIS, the project brings together more than 40 financial institutions and aims to improve cross-border interbank payments through the tokenization of central bank reserves and commercial bank deposits. 🌍
Commercial Bank of Dubai joins the European tokenized deposit network CBMT. It is the first non-European bank to join the initiative launched by Commerzbank, DZ Bank, Helaba and UniCredit. Since November 2025, the project has operated a shared sandbox for testing multi-bank tokenized deposit solutions, which BNP Paribas, ABN AMRO and Norway’s DNB have since joined. 🌐
AllUnity launches a dollar stablecoin. Following the euro, Swiss franc and Swedish krona, it is the fourth currency tokenized by the joint venture established by Galaxy, Flow Traders and DWS, Germany’s largest asset manager, backed by Deutsche Bank. 💵
TOP STORY
UK’s Biggest Banks Complete First Live Customer Transactions Using Tokenized Deposits
Seven lenders, real money: Last week, UK banks completed their first live customer transactions using tokenized deposits under the Great British Tokenised Deposit (GBTD) initiative. Its seven participating banks, including Barclays, HSBC UK, Lloyds and NatWest, ran two remortgages and one peer-to-peer consumer payment. The initiative is coordinated by UK Finance, the UK’s banking and finance trade body.
Why it matters: Tokenized deposits are moving from design into live testing across Europe. Germany’s CBMT is testing corporate payments and treasury workflows, UBS, PostFinance and Sygnum have tested deposit tokens between Swiss banks, and five Spanish banks completed a joint proof of concept in July. The experiments differ, but they increasingly test the same question: which payment workflows gain enough from programmability to justify putting bank deposits onto a new rail?
A shared platform: Only some of the seven banks, among them HSBC and Lloyds, issue tokenized deposits of their own. Technology provider Quant built the common GBTD platform, allowing banks at different stages of development to test cross-bank transactions through the same orchestration layer.
“For the purposes of the pilot, it wasn’t necessary for every participating bank to already have its own tokenized-deposit solution in production. We could leverage GBTD’s infrastructure to test the concept and focus on whether we could move value between parties across the network,” Ryan Hayward, Head of Digital Assets and Strategic Investments at Barclays, told Blockstories.
How it works: To move that value, all three transactions used conditional payments: the funds stayed locked in the customer’s account until an agreed event released them. The banks started with remortgages, where the new loan usually passes through a solicitor before paying off the old mortgage.
“Instead of wiring funds into a solicitor’s account and waiting for them to be sent on, the funds can remain locked at the first bank until the solicitor authorises the transfer. You effectively remove that intermediate funding and waiting step,” Hayward said.
Safer marketplace payments: The third transaction applied the same lock to a peer-to-peer purchase of the kind consumers make on online marketplaces, where buyer and seller usually don’t know each other. The buyer’s money stayed locked until the item changed hands, so the seller knew the funds were there and the buyer paid only once the exchange took place. That targets purchase scams, the UK’s most common form of authorised push payment (APP) fraud, which caused losses of £118.1 million in 2025.
Settlement stayed conventional: The payment flow changed for the customer, but interbank settlement stayed on existing rails. In the remortgages, the transfer between the two banks still went through CHAPS, the Bank of England’s traditional high-value payment system.
Not unique to GBTD: CBMT follows a similar hybrid model. Client payments move instantly on the shared ledger, while the banks carry exposures to each other until they settle in central bank money outside it.
Bonds next: GBTD’s next pilots will test how tokenized deposits can work alongside central bank money in capital markets. In the first quarter of 2027, the banks plan to issue three digital bonds and use tokenized deposits for the purchase and coupon payments. The interbank cash leg would then be synchronised with settlement in central bank money.
From transaction to product: The seven banks have not yet set a date for a commercial service, and UK Finance has warned that without a commercial model “there will be no innovation and no growth.” Hayward highlights one key condition:
“The next question is which use cases institutions actually want to take to market. GBTD can provide the rail, but commercialisation will depend on building the network and proving that there are use cases worth scaling.”
Tim Bailey is Chief Commercial Officer of Red Date Technology, which serves as a technical service provider to Commercial Bank Money Token (CBMT), a European interbank tokenized deposit initiative bringing together banks including Commerzbank, DZ Bank, UniCredit and BNP Paribas.
Both GBTD and the work you’re doing at CBMT focus on making commercial bank money programmable. Where do you see the strongest product demand for tokenized deposits emerging?
The clearest demand is where payments need to become part of an already digital business process. Corporate clients are automating treasury and operational workflows, but the payment leg still often sits on legacy banking infrastructure. Tokenized deposits can close that gap by allowing commercial bank money to plug directly into those workflows.
That is what we are testing on CBMT. One use case is direct ERP integration, where a payment can be triggered from a corporate system into a tokenized-deposit wallet and on to a recipient at another bank. We have also tested IoT-based pay-per-use payments and are now working on agentic payments, with predefined limits, bank-verified identities and governance controls around what an AI agent is allowed to do.
The broader point is that tokenization brings the payment instruction and the value transfer much closer together. Instead of payments sitting as a separate process, they can increasingly be embedded into the underlying workflow and triggered automatically when predefined conditions are met.
Mark Goree is UK Managing Director at Fnality, a start-up that settles tokenized transactions in digital cash backed by central bank reserves. Its shareholders include major banks such as Santander, Citi, UBS and Barclays, as well as market infrastructures including DTCC and Euroclear.
How far have banks progressed in developing tokenized deposit initiatives, and what stage have they reached on the path to commercial deployment?
Banks are at a tipping point. Innovation and digital asset teams have proved the technology, developed use cases and built internal understanding.
Now, the conversation is broadening into markets, treasury, funding and collateral management. These functions manage liquidity, balance sheets, settlement and client activity. Their involvement helps determine which use cases have sufficient commercial viability to enter production.
That transition requires greater commitment. Banks need senior management to approve investment, integrate infrastructure into back-office and treasury systems, adapt processes, and secure approval from legal, compliance, risk, and cybersecurity teams. The focus is now on actively progressing those use cases that create the greatest value and can support global scale.
The next phase is about connecting tokenised assets and different forms of money in a way that institutions can use reliably at scale. Interoperability and network participation will be critical. Across platforms and jurisdictions, the real test will be whether assets and cash can move together, delivering clear legal certainty and settlement finality.
Switzerland moved into digital assets earlier than almost any other banking market. For our new report, we spoke with more than a dozen Swiss banks to understand what happened after launch: which business cases proved viable, how institutions chose between outsourced, hybrid and internally controlled infrastructure, and where tokenization and digital money are progressing beyond pilots.
Broadridge: Digital Assets Product & Delivery Manager, London 🇬🇧
Clearstream: DLT Solution Architect, Frankfurt 🇩🇪
Deutsche Börse Group: Product Manager (FundsDLT), Luxembourg 🇱🇺
JPMorgan: Digital Markets - Markets Digital Assets - Executive Director or Vice President, London 🇬🇧
Mastercard: Director Security Engineering for Blockchain and Digital Solutions, London 🇬🇧
Northern Trust: Senior Risk Management Specialist, Digital Assets (Blockchain Technology Focus), London 🇬🇧
Sparkasse: Product Manager - Crypto, Digital Assets and Securities, Berlin 🇩🇪
tradias: Operations Specialist, Frankfurt 🇩🇪
Digital Collateral: A Practical Reality (Citi) — This report explores how tokenization could help institutions move collateral around the clock, reduce prefunding, and free up capital. Through case studies spanning US Treasuries, money market funds, and private securities, Citi examines how digital assets are entering institutional funding markets and why interoperability and integration with existing systems remain essential to scaling adoption.
The Connective Tissue of Digital Finance (Citi, DTCC and Swift) — As tokenized markets develop, attention is shifting from building platforms to connecting them. The report argues that adoption depends on common standards and interoperability with traditional infrastructure, enabling clients to move cash and collateral across networks through existing banking relationships.
→ Want more? Visit Blockstories Library for a curated selection of 120+ reports on digital assets.
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Disclaimer: The information provided in the Institutional Briefing by Blockstories does not constitute investment advice. Accordingly, we assume no liability for any investment decisions made based on the content presented herein.